Fitch Ratings has downgraded one and affirmed 12 classes of Morgan Stanley Bank of America Merrill Lynch Trust, commercial mortgage pass-through certificates, series 2013-C13 (MSBAM 2013-C13).

The Rating Outlook on class F remains Negative.

RATING ACTIONS

Entity / Debt

Rating

Prior

MSBAM 2013-C13

A-3 61763BAT1

LT

AAAsf

Affirmed

AAAsf

A-4 61763BAU8

LT

AAAsf

Affirmed

AAAsf

A-S 61763BAW4

LT

AAAsf

Affirmed

AAAsf

A-SB 61763BAS3

LT

AAAsf

Affirmed

AAAsf

B 61763BAX2

LT

AAsf

Affirmed

AAsf

C 61763BAZ7

LT

Asf

Affirmed

Asf

D 61763BAC8

LT

BBB-sf

Affirmed

BBB-sf

E 61763BAE4

LT

BB+sf

Affirmed

BB+sf

F 61763BAG9

LT

BB-sf

Affirmed

BB-sf

Page

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VIEW ADDITIONAL RATING DETAILS

KEY RATING DRIVERS

Increased Loss Expectations; Greater Certainty of Loss: The downgrade on class G and Negative Outlook on class F reflect higher loss expectations since Fitch's prior rating action, driven by increased losses on The Mall at Chestnut Hill (15.3% of pool) due to declining performance and increasing refinance risks as the loan approaches its 2023 maturity date. In addition, higher expected losses were applied pool-wide to address the majority of loans maturing in the second-half of 2023. Nine loans (25.8%), including four (5.3%) in special servicing, were designated Fitch Loans of Concern (FLOCs). Fitch's current ratings reflect a base case loss of 5.60%.

Regional Mall FLOC: The largest contributor to loss expectations, The Mall at Chestnut Hill (15.3%), is secured by 168,642-sf of a 465,895-sf reginal mall in Newton, MA and anchored by Bloomingdales (non-collateral). Crate and Barrel is the largest collateral tenant and leases 7.9% NRA through January 2024. Other notable tenants include Apple, Coach and Tiffany and Co. The loan, which is sponsored by Simon Property Group, was designated a FLOC due to occupancy declines, rollover concerns, market competition and refinance concerns at the loan's November 2023 maturity.

Collateral occupancy declined to 79% as of March 2022 from 84% at YE 2020 and 90% at YE 2019 due to tenant vacancies. The property has also experienced increasing expenses against lower expense reimbursements, lowering the NOI DSCR for this interest-only (IO) loan to 1.60x at YE 2021 from 1.86x at YE 2020 and 2.16x at YE 2019. In-line tenant sales were $586 psf ($380 psf excluding Apple) as of the TTM ended March 2021 compared with $963 psf ($781 psf excluding Apple) at issuance. Near-term rollover risks include leases for 24% of the NRA expiring by YE 2023. The property also faces nearby competition with Natick Mall, an approximate 1.9 million square foot mall owned by Brookfield Properties Retail Group, located approximately 10 miles from the subject.

Fitch's base case loss of 11.7% reflects a 9% cap rate off the YE 2021 NOI. Fitch's analysis reflects concerns with the occupancy declines, rollover risks and nearby competition but gives credit for the strong tenancy, sales and sponsorship.

Pool/Maturity Concentration: The top 10 loans comprise 54.6% of the pool. Loan maturities are concentrated in 2023 (96.6%). Based on property type, the largest concentrations are retail at 60.9%, hotel at 14.6% and multifamily at 9.9%.

The largest loan in the pool, Stonestown Galleria (15.5%), is secured by 585,758-sf of an 853,546-sf regional mall in San Francisco, CA and sponsored by Brookfield Properties Retail Group. Occupancy declined to 72% as of March 2022 from 98% at YE 2019 primarily due to Nordstrom (previously 28% NRA) vacating at the end of 2019. The occupancy declines coupled with economic disruptions from the pandemic resulted in a 30% decline in NOI, with servicer-reported NOI DSCR falling to 1.25x as of the TTM ended March 2022 from 1.79x at YE 2019.

The sponsor has been successful in redeveloping vacated space at the mall. Target recently expanded into 1/3 of the former Nordstrom Space, increasing its footprint to approximately 15% from 5.5% and bringing total collateral occupancy to approximately 72% as of March 2022 from 65% at YE 2020. In addition, the sponsor actively redeveloped a non-collateral anchor box previously occupied by Macy's into a mixed use space, with leases executed with Whole Foods, Regal Cinemas and Sports Basement.

Comparable in-line sales for tenants occupying less than 10,000 sf and reporting sales were $1,005 psf ($607 psf excluding Apple) for the TTM ended March 2022 compared with $648 psf ($372 psf excluding Apple) for the TTM ended June 2021.

Fitch's base case loss of approximately 2.5% is based off a 10% cap rate and a 15% total haircut to the YE 2019 NOI. The loan is not currently considered a FLOC. Fitch's s analysis gives credit for the positive leasing activity and upside potential for the existing vacant space and reflects the high-quality asset, location and sponsor commitment.

Increasing Credit Enhancement (CE): As of the July 2022 distribution date, the pool's aggregate principal balance has been reduced by 21.1% to $785.4 million from $995.3 million at issuance. Four loans (19.0%) are full-term IO, and 16 loans (36.9%), which had a partial-term IO period at issuance, have all begun amortizing. Eleven loans (10.2%) are fully defeased. Cumulative interest shortfalls of $911,306 are currently affecting the non-rated class H.

RATING SENSITIVITIES

Factors that could, individually or collectively, lead to negative rating action/downgrade:

Downgrades of classes in the 'AAAsf' and 'AAsf' categories are not likely due to sufficient CE and expected continued amortization but could occur if interest shortfalls affect these classes. Classes in the 'Asf' and 'BBBsf' categories would be downgraded should overall pool losses increase significantly and/or one or more of the larger FLOCs have an outsized loss, which would erode CE. Classes E, F and G would be downgraded if loss expectations increase from further performance deterioration on the FLOCs or additional loans become FLOCs and/or transfer to special servicing.

Fitch has identified both a baseline and a worse-than-expected, adverse stagflation scenario based on fallout from the Russia-Ukraine war whereby growth is sharply lower amid higher inflation and interest rates; even if the adverse scenario should play out, Fitch expects virtually no impact on ratings performance, indicating very few rating or Outlook changes. However, for some transactions with concentrations in underperforming retail exposure, the ratings impact may be mild to modest, indicating some changes on sub-investment grade notes.

Factors that could, individually or collectively, lead to positive rating action/upgrade:

Upgrades of classes B, X-B, C, PST and D may occur with significant improvement in CE and/or defeasance, but would be limited based on sensitivity to concentrations or the potential for future concentration. Classes would not be upgraded above 'Asf' if there is a likelihood for interest shortfalls. Upgrades of classes E, F and G are not likely but could occur if performance of the FLOCs improves significantly and there is sufficient CE.

Best/Worst Case Rating Scenario

International scale credit ratings of Structured Finance transactions have a best-case rating upgrade scenario (defined as the 99th percentile of rating transitions, measured in a positive direction) of seven notches over a three-year rating horizon; and a worst-case rating downgrade scenario (defined as the 99th percentile of rating transitions, measured in a negative direction) of seven notches over three years. The complete span of best- and worst-case scenario credit ratings for all rating categories ranges from 'AAAsf' to 'Dsf'. Best- and worst-case scenario credit ratings are based on historical performance. For more information about the methodology used to determine sector-specific best- and worst-case scenario credit ratings, visit https://www.fitchratings.com/site/re/10111579.

USE OF THIRD PARTY DUE DILIGENCE PURSUANT TO SEC RULE 17G -10

Form ABS Due Diligence-15E was not provided to, or reviewed by, Fitch in relation to this rating action.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

ESG Considerations

Unless otherwise disclosed in this section, the highest level of ESG credit relevance is a score of '3'. This means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/esg

Additional information is available on www.fitchratings.com

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